AUTOS:

X-Prize winner's empty facility foreclosed, shuttered

Mike Soraghan, E&E reporter

Greenwire: Tuesday, November 27, 2012

Li-ion Motors Corp., the troubled electric car company that won the 2010 automotive X-Prize, has closed its manufacturing facility, laid off all its employees and settled with a former X-Prize competitor with which it had agreed to share the prize money.

But the car that won the prize, the Wave II, can still be ordered on the company's website. The website also still bears the Progressive X-Prize logo.

The company's annual report, filed with the Securities and Exchange Commission the day before Thanksgiving, says the company's property at the manufacturing facility in Mooresville, N.C., was sold in August in connection with foreclosure actions filed by its lenders.

But all assets had already been seized by the sheriff's office in June because the company stopped making payments that were part of a settlement resolving the dispute about the X-Prize winnings. It's not clear what remained for the foreclosure sale.

"The company currently has no employees, (only an accounting consultant with limited hours and the CEO)," the annual report states. "Our facility in Mooresville, N.C. was closed in May 2012, and all employees in North Carolina were released. Currently, all ongoing work is being performed by consultants."

The report also states that the company wants to start a new facility in Quebec, "where government incentives will help cover expenses related to research and development."

A voicemail message seeking comment, left at a number designated on the company website, went unreturned. A message sent to the company's public relations email address seeking comment bounced back.

The company, which trades in the penny stock realm, was one of three winners of the X-Prize, taking home $2.5 million for its futuristic-looking battery-powered car.

A detailed look at Li-ion (pronounced "lion") by Greenwire found that, before winning the contest, the company was dogged by allegations of fraud, investigations by securities regulators and complaints from customers (Greenwire, Oct. 27, 2010). According to the annual report, the company also owes $566,071 to the Internal Revenue Service.

The company was also criticized by its X-Prize competitors for refusing to honor an agreement to split the $2.5 million prize four ways. After the five finalists in the "alternative side-by-side" tied, a 100-mile energy and performance run was held as a tiebreaker. Li-ion won by 0.179 second.

But minutes before the race, team leaders for Li-ion and three other finalists had signed an agreement on spiral-bound notebook paper, agreeing to share the winnings. The winner was to keep $1.7 million but share $800,000. Two months after winning the prize, Li-ion announced in a press release that it would not honor the agreement because one of the five finalists had decided not to participate.

Last week's annual report indicates that one of the other finalists, TW4XP maker Fine Mobile, didn't accept that explanation. The report says that the two companies "entered into a confession of judgment" in which Li-ion would pay $80,000 in eight monthly installments.

Under the 2010 agreement as written, the TW4XP team was due $400,000 from the winnings.

Li-ion made the first payment in December 2011 but didn't make additional payments, a default that entitled Fine to $120,000 under the judgment agreement. As a result, the company's report states, the Iredell County Sheriff's Office took possession of the Mooresville facility, "seizing all remaining assets."

The company's most recent quarterly statement to the SEC, filed in June, made no mention of the Fine Mobile litigation. It described a foreclosure action against the Mooresville facility but did not indicate that the facility was closed.

The company, which is traded on the over-the-counter or penny stock market, has been repeatedly scrutinized by federal securities regulators, though no legal action has been taken against the company in the United States (Greenwire, Dec. 8, 2011). Canadian securities officials, though, halted trading in its stock around the time it won the X-Prize.